The euro was weakened today by signs of strong inflation in the euro zone which economists said could deter the European Central Bank from cutting interest rates.
The single European currency fell to $0.8963 from $0.8974 overnight in New York.
Economists said that the latest inflation figures from the euro zone could prompt the ECB to maintain its strict anti-inflation stance and shun calls for a cut in euro-zone interest rates.
Few economists were betting on a rate cut from the ECB at its fortnightly meeting on Thursday.
Inflation in two key German states - Baden-Wuerttemberg and Bavaria - rose sharply in April, official figures showed today.
The data followed strong Italian inflation figures yesterday. According to preliminary data released by Italy's major cities, Italian consumer prices rose by 0.4 per cent in April from March and by 3.1 per cent from a year ago.
Credit Suisse First Boston economist Mr Peter von Maydell said that on the whole, euro zone data remained solid against other economies.
"Europe does have the strongest data in the world, it's been that way for quite some time and the divergence with the rest of the world is getting larger," he said.
AFP